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BusinessIPPs threaten to walk away from negotiations on Ghana's energy debt crisis

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IPPs threaten to walk away from negotiations on Ghana’s energy debt crisis

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Private power producers in Ghana are considering pulling out of discussions aimed at restructuring $1.6 billion in outstanding payments, posing a challenge to the country’s ongoing efforts to manage its debts.

CEO of Independent Power Generators Ghana, Elikplim Apetorgbor expressed frustration that the government hasn’t met its commitments regarding payments, despite concessions made by some producers on pricing and charges for energy.

Apetorgbor stated, “We were anticipating that a significant portion of the arrears would have been cleared by now, with a plan in place for the remainder.

“However, we are now reconsidering our agreements and may insist on full payment of the outstanding amounts.”

As of December, the government had paid around $400 million, Apetorgbor noted.

One aspect of the agreement with the IPPs was for the state-owned Electricity Company of Ghana to stay up to date on its payments starting from June 2023, but these payments have fallen short, according to Apetorgbor, dropping from 70% of monthly bills to just 21% in recent months.

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The Finance Ministry did not provide immediate comments on the matter.

Ghana has been engaged in discussions with IPPs since last year to address these arrears as part of its broader strategy to manage external debts.

This disagreement could potentially impact Ghana’s progress under an International Monetary Fund program aimed at making its debts sustainable.

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Ghana secured an IMF bailout in 2023 following debt challenges and a missed eurobond payment.

It successfully restructured domestic debts last year and is currently finalizing negotiations to reorganize loans totaling $5.4 billion and eurobonds worth $13 billion.

The Independent Power Producers Group, comprising nine members, plays a significant role in Ghana’s energy sector, contributing over 60% of the country’s peak power demand of 3,618 megawatts and 80% of its thermal energy generation.

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